How the Economy Affects Buy to Let Investments

04

Oct, 2016

When it comes to investing in property, it’s a good idea to keep your eye on the current condition of the economy. Since the national and global economy both have a huge effect on the price of property and whether or not more people are planning to buy their own homes, it can also have a big impact on how well a rental property or buy-to-let investment venture does. Currently, the economy means that more and more people are choosing to rent a home rather than buy, which puts buy-to-let investors and landlords in one of the best positions.

Home Buyers

The amount of people who decide to purchase their own home is largely dependent on the economy. Since house prices often fluctuate throughout the year due to a range of external, economic factors, landlords will often find that there is a surge in people looking to rent or remain in their rental properties when house prices are at an average high, whereas when they are lower than usual, this is usually a prime time for those who’ve been considering purchasing a home to go out and look for one. Because of this, landlords may often find that their business does much better when house prices are high.

Investing in Property

Another thing that landlords in the buy-to-let field will need to think about in regards to the economy is the price of the homes that they themselves want to invest in. As mentioned above, the global and national economies have a huge effect on the prices of property in the UK, something which could have a big impact on a buy-to-let business. Ideally, you will want to be investing in and advertising property to rent when house prices are high in order to attract more potential tenants, however, this also means that in order to achieve this, landlords may often have to part with more of their money initially.

Rental Payments

The economy can also have an effect on how much landlords can expect to pay for things such as maintenance and landlord insurance plans, along with the size of the rental payments which tenants will pay each month in return for living in the property. Since the economy can often have an impact on things such as the rate of unemployment and average salaries, landlords may be able to earn more, or might have to reduce rental payments in order to make money from their property. As a landlord it’s not only important to make sure that you are up to date with the global and national economies and the effect that these have on your buy-to-let venture, but you should also be aware of and follow the economy in the local area or areas where you own and rent out properties.

The economy can have a number of different effects on landlords in the buy-to-let market. From finding more tenants to how much rent you charge and even how much you invest in a property initially, the economy is definitely important.